Giantaxe

If they do the gross-up correctly (mine did) they will pay the tax on the $3000 as well. And the tax on the tax on the $3000 etc etc. A nice geometric (?) progression, in fact, to calculate correctly.

snowbunny

IOW they figure the extra amount needed to cover the taxes on the relo income AND the taxes on the extra amount!

Giantaxe

No, because that's not enough. Paying you the amount for "taxes on the extra amount" will in itself generate more taxable income. This will produce a (negative) geometric progression trending towards zero, the sum of which is the gross up amount they should be paying.

gazzpfc

I had the meeting it was a lively affair, thing is I kept thinking is why do the make the sytem here so wank.
Upshot is I seem to have a deal where my own exposure will be very limited.
I now of course need to find a good accountant as some things like my daughters school fees etc or some such seem to be a partial deductable etc etc.
As I was only here for 3 months in 2007 I do not know if that 'part' year has an impact.

Ozzidoc

It doesn't quite work like this. I used to have to do this in the uk, for uk employees. The principle of "grossing up" is the same.

For simplicity's sake.... relocation allowance = 10,000 payable as a lump sum, this amount is grossed up and treated like salary. So, it may be that - depending on the city/county/state/country, the figure is actually 19000.

So, if the employee's usual annual earnings is 100,000 (keeping it simple & round numbers), then for the tax year in which he/she moved, that annual earnings is shown as 119,000.

(Of course there could be other implications like ROTH IRA eligibility etc....)

Tracym

I just saw an outfit in Schaumburg, a friend of mine I very much respect has used them for years. Small outfit - I was quite happy with them. They are not too far from you.

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